GOOD AND BAD IN iMEGA RULING

7 March 2008

Online gambling pressure group granted standing to appeal


Somewhat like the curate's egg, parts of a US judicial ruling on Internet gambling were good, and some bad this week. The Interactive Media Entertainment & Gaming Association emphasised the positive, but key parts of their original case against the US government over the Unlawful Internet Gambling Enforcement Act were dismissed, although the organisation was given standing to appeal.

The case dates from last year, and District Judge Mary L. Cooper of New Jersey clearly gave her decision a great deal of careful thought - well over the thirty days that she said it would take. iMEGA had challenged the Unlawful Internet Gambling Enforcement Act - designed to stop online gambling by choking off the electronic processing of money for online gambling - and asked the judge to suspend its implementation.

Lawyers for iMEGA proposed that the law was in a number of areas unconstitutional such as freedom of speech and invasion of privacy. The Department of Justice argued against that, saying that the Act has been properly passed in Congress, and that iMEGA members had not yet been affected because the regulations supporting the law had not yet been implemented, therefore the group had no standing to bring a challenge to court (see previous InfoPowa reports).

The bad news was that Judge Cooper ruled that iMEGA had not shown sufficient cause to order her to block enforcement of the Unlawful Internet Gambling Enforcement Act of 2006. And she could not rule on the constitutional issues, although she commented: "The acceptance of a financial transfer is not speech. As the UIGEA does not impact expression, it does not come within the purview of the First Amendment.

"The plaintiff's claims express a fundamental disagreement with Congress's judgment that Internet gambling should be controlled legislatively, and pose questions as to whether (the law) ... will be successful in accomplishing its desired ends," she wrote. "But it is not the court's role to pass on the wisdom of a Congressional act or speculate as to its effectiveness."

The law was legally enacted and does not violate the Constitution, she ruled in dismissing the association's challenge, neither does it violate World Trade Organisation rules.

The good news was that Judge Cooper gave iMEGA legal standing to challenge the constitutional elements of the UIGEA in an appeal court, defeating the government's argument that the organisation had no standing. The current state of the UIGEA regulations - still bogged down by criticism that it is not specific enough for effective implementation - will add to government woes on the controversial Act.

iMEGA spokesmen said such an appeal would be launched at the Third Circuit Court of Appeals within the next two months. A US Justice spokesman said the department was reviewing the judgement and declined to comment further.

iMEGA claimed that the authority of the states had been upheld by the courts - an important element in anti-gambling laws.

“Granting iMEGA standing is a major victory any way you look at it,” said Eric M. Bernstein, attorney for iMEGA. “Judge Cooper’s ruling holds that, even with the passage of [the Federal law] UIGEA, online gambling is only illegal in states where a statute specifically says it is.”

The judgement exempted criminal sanctions under UIGEA against the financial institutions that would be implementing it.

“iMEGA is very pleased that the Court recognized our standing and the weaknesses in UIGEA” said Joe Brennan Jr., the chairman of iMEGA.

“Judge Cooper found that banks, credit card companies and other payment system instruments are exempt from criminal sanctions under UIGEA, significantly undercutting UIGEA’s enforcement mechanism. Her ruling echoes the growing consensus of opinion that UIGEA is a fundamentally flawed statute.

“We believe Judge Cooper missed the opportunity to affirm Americans’ online privacy rights and we plan to appeal to the Third Circuit Court of Appeals,” said Bernstein. “However, her honor’s decision significantly undercuts the federal government’s argument that UIGEA is a well-drafted, effective and enforceable law.”

iMEGA has issued a public statement on the case, available here: http://www.imega.org/2008/03/07/court-grants-imega-standing-to-challenge-flawed-online-gaming-law/.

Online Casino News courtesy of InfoPowa